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1 December, 14:33

Zurasky Corporation is considering two alternatives: A and B. Costs associated with the alternatives are listed below: Alternative AAlternative B Materials costs$24,000 $56,000 Processing costs$30,000 $30,000 Equipment rental$10,200 $28,100 Occupancy costs$19,100 $26,800 What is the differential cost of Alternative B over Alternative A, including all of the relevant costs

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  1. 1 December, 14:43
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    Answer: $57,600

    Explanation:

    The differential Cost of Alternative B over Alternative A can be calculated by subtracting the various costs of Alternative B from A and then summing them up.

    Materials

    = Alternative B costs - Alternative A Costs

    = 56,000 - 24,000

    = $32,000

    Processing Costs

    Alternative B costs - Alternative A Costs

    = 30,000 - 30,000

    = $0

    Equipment Rental

    = Alternative B costs - Alternative A Costs

    = 28,100 - 10,200

    = $17,900

    Occupancy Costs

    = Alternative B costs - Alternative A Costs

    = 26,800 - 19,100

    = $7,700

    Adding them all up we get,

    = 7,700 + 17,900 + 32,000

    = $57,600

    $57,600 is the differential cost of Alternative B over A.
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